In the past two days, investors have been on the same as sitting in the car, especially investors who continue to have small-cap stocks, taking the micro-cap stock index as an example, which fell 8.9% on Monday and 10% on Tuesday, and 1,000 stocks in Shanghai and Shenzhen fell by more than 10%, and only less than 300 stocks rose; on Wednesday, it rebounded sharply by 8.3%, with more than 5,000 stocks rising, and the proportion of rising stocks was as high as 96%, and the three major indexes all rose by more than 2%. Monkey City".
Why does the stock market jump up and down? The documents are intensively introduced, the reform is like an arrow on the bow, the shareholders misread the documents and do not understand the true meaning, the capital smashes the market to find comfort, the Securities Regulatory Commission issued an explanation in the middle of the night, and the market after being appeased understands the rebound in seconds, in fact, the document is still that document, and there is no change, but the stock market seems to have experienced a round of bear-bull conversion, all of which happened within 3 days, A shares do not necessarily make you money, but it will definitely make you think. Let's resume trading over the past three days, and then talk about the crisis (danger and opportunity) of small-cap stocks.
1. What did the first two countries talk about?
On Monday and Tuesday, the sharp fall of small-cap stocks, the market mostly blamed the national nine, so let's start with the national nine, on April 12, the State Council issued the "Several Opinions on Strengthening Supervision and Risk Prevention to Promote the High-quality Development of the Capital Market", the document has a total of nine, this is the third similar document issued in 2004 and after 2014, known as the third "national nine".
In 2004, the State Council promulgated the first "Nine Articles" -- "Several Opinions on Promoting the Reform, Opening-up, and Stable Development of the Capital Market", and what was the biggest purpose or expectation of the capital market in this document? It was "development", and the full text of "development" appeared 49 times, while "supervision" only appeared 17 times, which shows that supervision was far from the most important purpose at that time, and "development" was, what was the biggest obstacle to the development of the capital market at that time? In fact, it was "equity division" Due to the division of equity, the corporate shares cannot be circulated in the secondary market, which greatly restricts the speed of the listing of enterprises and the efficiency of resource allocation. The greatest achievement of the capital market at that time was to solve the problem of equity division and create conditions for the launch of the GEM.
Before 2004, there were about 1,100 enterprises listed, an average of 80 companies listed every year, and 1,200 companies were listed in the 14 years from 2004 to 2013, with an average of 120 companies listed every year, and the speed of enterprises listed on the market increased by 50 percent, which is the essence of "development."
In 2014, the State Council issued the second "National Nine Articles" - "Several Opinions on Further Promoting the Healthy Development of the Capital Market", "development" appeared 43 times, and "supervision" also appeared 38 times, indicating that this time it is both development and supervision, but the word "appropriate" was added in front of the supervision. At the end of 2014, the Stock Connect was launched. At the same time, we will promote the development of mixed ownership and improve the corporate governance structure.
The 10 years from 2014 to 2024 are still a decade of development, the opening of Hong Kong Stock Connect and Land Stock Connect, and the registration system was also launched in 2019, ushering in a comprehensive registration system, 3,000 companies have been listed in this decade, with an average of 300 per year, and the speed has increased by 150% compared with the previous decade.
2. The nine articles of the new country have redefined the capital market
In 2024, the third "National Nine Articles" will come quietly, there is no news, the secrecy work is very strict, and none of the foreign media with a very accurate prediction broke the news in advance.
What does the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market" say? "Development" only appeared 31 times, significantly less than the 49 times in 2004 and 43 times in 2014, while "supervision" appeared 33 times, although lower than the 38 times in 2014, but this time the supervision was not only not "appropriate" to weaken, but added the word "strict" and "strong", which is an era of strong supervision and strict supervision is coming.
In the nine articles of the country in 2004 and 2014, there was no combination of the words "strong supervision", and this time it was directly stated in the first article that "supervision must be comprehensively strengthened" and "strong supervision, risk prevention, and high-quality development as the main line".
Article 2: Strictly control the entry of issuance and listing; Article 3: Strict supervision of listed companies; Article 4: Intensify supervision and control over delisting; Article 5: Strengthen the supervision of securities and fund institutions, and promote the industry to return to its origins, become better and stronger; Article 6: Strengthen transaction supervision and enhance the internal stability of the capital market.
Five of the nine articles of the country start with strict supervision and strong supervision, and the definition of the capital market has changed from "promoting" in 2004 and "promoting" in 2014 to "strengthening supervision" in 2024. The requirements and purpose of the capital market have completely changed.
In 2004 and 2014, "financing" appeared 11 times, and this time it only appeared 5 times, and the frequency of occurrence has dropped significantly, and it used to be to promote the proportion of financing, enrich financing tools and channels, and diversify financing mechanisms.
This time, the statement on financing is that the investment and financing structure tends to be reasonable, the refinancing review is strictly checked, and the regulatory system for margin financing and securities lending is improved.
What really talks about financing is to broaden overseas financing channels and increase equity and debt financing support for enterprises that are in line with the national industrial policy guidance and make breakthroughs in key core technologies.
This shows that in the future, strong/strict "regulation" will be dominant, and the importance of financing and development will be weaker than in the previous two decades. China now has more than 5,000 listed companies, in terms of quantity, China's stock market has completed the number of IPOs achieved in the United States in 30 years, in terms of quality, in the last four or five years, IPO leaps and bounds, more than 2,000 companies listed, China's enterprises with a little qualification are basically listed, and the rest, in comparison, are not as good as the quality of listed companies.
The huge stock of enterprises will be bigger and stronger through the high-quality capital market, serve the overall situation of Chinese-style modernization, and eliminate those enterprises that can neither achieve profits to feed investors, nor achieve technological breakthroughs to solve industrial problems, and cannot provide jobs for the society.
3. Investors do not have a deep understanding of the spirit of the document
In fact, the nine articles of the country this time are not profound, the name of the document already says everything, I don't believe you read the name of the document again - "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", is it very straightforward?
The capital market that realizes strong supervision and prevents risks is naturally a capital market with high-quality development, and a large number of enterprises are listed, which is inevitable that the mud and sand will fall, and it is inevitable that the interests will be transferred.
This kind of chaos is something that needs to be cracked down on and dealt with in the next 10 years, and those who have taken advantage of the chaos and violated laws and regulations in the past few years to seize a huge amount of wealth and interests should now be trembling.
After 2018, there are as many as 2,000 listed companies, of which 85% have a current market value of less than 10 billion, and nearly 70% have a market value of less than 5 billion, that is, small-cap stocks, while only 70% of the companies listed before 2019 have a market value of less than 10 billion.
When the China Securities Regulatory Commission adheres to the spirit of the document of the nine articles of the country, hoping to strictly delist (Article 4: increase the supervision of delisting), I did not expect the stock market to collapse, to be precise, the collapse of small and micro cap stocks, the Shanghai Composite Index, the Shenzhen Stock Exchange Component Index and the ChiNext Index all rose by more than 1%, but the CSI 2000 Index fell 4%, the Micro Cap Index fell 8.9%, and the CSI 2000 Index fell by more than 7% on Tuesday, and the Micro Cap Index fell by more than 10%, and the 1,000-share fall limit came.
On Tuesday evening, the China Securities Regulatory Commission issued an urgent document to appease the market and explain in more detail the adjustment of the delisting system, bluntly saying:
The purpose of this delisting indicator adjustment is to increase efforts to clear out the "zombie shells" and "black sheep", not for "small-cap stocks". Steady arrangements have been made in terms of standard setting and transition period arrangements, which will not have an impact on the market in the short term. There is a view in the market that "this delisting rule change is mainly for small-cap stocks", which is a pure misreading.
Today's stock market rose sharply, the CSI 2000 rose 6.66%, the micro-cap stock index rose 8.3%, more than 5,000 stocks rose, and the market was peaceful, but the document was still the same document from beginning to end, and there was no change.
Shareholders hope that the regulator will deal with all kinds of chaos and hope to strictly supervise, but this kind of strict supervision will inevitably touch the interests of many existing people, and will also cause the unreasonable valuation part of the entire market to be flattened, once the interests of shareholders are damaged, will they have the courage to self-revolution at that time? Reform is not only for the regulators to turn the blade inward, but also for the improvement of shareholders' self-awareness and literacy.